Southwestern Loses $608M in 2Q, Drills First 3 Utica Wells
Southwestern Energy issued its second quarter 2021 update last Friday. Southwestern produced 276 billion cubic feet equivalent (Bcfe) during 2Q, up from 201 Bcfe in 2Q20 (before it acquired Montage Resources). That works out to be 3.0 Bcf/d, of which 79% (2.4 Bcf/d) was natural gas and the rest was liquids (NGLs). Like EQT, Antero, and other major M-U drillers, Southwestern blew it on “unsettled derivatives” during the quarter. The company posted a $608 million loss for the quarter overall, losing $772 million on derivatives.
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In June MDN brought you the news that Enbridge’s Texas Eastern Transmission (TETCO) pipeline is being flow-restricted by the Pipeline and Hazardous Material Safety Administration (PHMSA). Some 40% of the Marcellus/Utica molecules that flow through TETCO’s pipeline to destinations in the southeastern U.S. disappeared and were predicted to stay that way until the end of September (see 
Three weeks ago MDN told you about Equitrans’ plan to buy indulgences, er, a, carbon offsets for its 303-mile Mountain Valley Pipeline (MVP) project (see 
The anti-fossil fuelers of Nicetown, PA (near Philadelphia) aren’t so nice. Even though a Marcellus gas-fired power plant in Nicetown has already been built by the Southeastern Pennsylvania Transportation Authority (SEPTA) and is currently in operation (has been since last November) providing cheap electricity for railroads and heat for a local bus depot, antis want it all shut down. They claim it’s racist to have the facility located in the community where it’s located. The Joe Biden EPA is investigating Nicetown with an eye to shutting it all down. What a tragedy on so many levels. Once again energy has been politicized by the left in this country.
The Federal Energy Regulatory Commission (FERC) is moving to revise a two-decade-old standard that guides approval of proposed interstate natural gas pipelines. FERC Chairman Richard “Dick” Glick informed a congressional panel last week of the impending changes. Glick wants to permanently change the standards used so future FERC commissioners will be handcuffed to his twisted view of global warming when considering whether or not to approve a pipeline project.
MARCELLUS/UTICA REGION: West Virginia and the value of national gas; OTHER U.S. REGIONS: Dominion plan calls for all-gas Cope plant in SC; Towns trying to ban natural gas face resistance in their push for all-electric homes; Outrage growing in north Denver neighborhood as hundreds go three days without natural gas; Why is the Biden administration attacking America’s energy independence?; NATIONAL: Electrification alone won’t cut it for decarbonization, say natural gas experts.
Yesterday EQT, the largest natural gas producer in the U.S., issued its second quarter 2021 update. There’s a lot to unpack. While the company produced 4.7 Bcfe/d of natural gas and liquids in 2Q and $155 million in free cash flow, the company lost $936 million during 2Q21 versus losing just $263 million in 2Q20. The loss came from a bet on derivatives gone bad that cost the company $1.3 billion. Oops. There was plenty of talk about “sustainable shale” and ESG efforts. CEO Toby Rice touted the recent successful acquisition of Alta Resources, which closed on July 21.
Antero Resources, which drills almost exclusively in the West Virginia Marcellus/Utica, issued its second quarter 2021 update yesterday. Antero is the third-largest natural gas producer in the U.S. and the second-largest NGL producer. Big company. Important company. Antero is one of the best hedgers (preselling production at a set price) in the business. However, like EQT (see today’s lead story), Antero fumbled with a derivatives bet in 2Q and ended up posting a $523 million loss for 2Q21, versus losing $463 million in 2Q20. On the positive side, Antero generated $105 million in free cash flow during 2Q21.
As they have done in the past few quarters, CNX Resources again issued a quarterly update without an accompanying summary/overview. We have the raw numbers (below), and we have excerpts from the conference call with analysts. One observation from the numbers: It seems major M-U drillers collectively went over the derivatives cliff in 2Q21. CNX, like Antero and EQT (see those stories in today’s update) posted a 2Q loss of $354 million based on a derivatives loss of $539 million. The company did manage to generate free cash flow of $117 million and pay down another $89 million in debt.
Seneca Resources, the drilling arm of utility giant National Fuel Gas Company, is conducting its first experiment with electric fracking. We’re aware of at least three other Marcellus/Utica drillers that currently use electric fracking: Range Resources, CNX Resources, and Olympus Energy (former Huntley & Huntley). Seneca, like Range, will use U.S. Well Services to provide e-fracking. Seneca is conducting a field trial for a 6-well pad in Lycoming County, PA.
It seems to be the season of not only second quarter updates, but also 2020 ESG (environmental, social, governance) updates, often referred to as corporate sustainability or social responsibility reports. There are half a dozen different phrases and terms used to describe the same thing. Yesterday Equitrans Midstream Corporation (the former EQT Midstream) issued its 2021 Corporate Sustainability Report, covering activity for the calendar year 2020.
The latest weekly Enverus U.S. rig count shows total rigs in use retreating just a bit. For the week ending July 28, the rig count stood at 599, down 5 rigs from last week’s post-pandemic high of 604 (see 
